As a move to help increase tax-related awareness among businesses of all sectors operating in the United Arab Emirates, the Federal Tax Authority (FTA) has now launched a “Tax Support” initiative.
Activities conducted under the new initiative will function as a direct and continuous contact for business owners across all the sectors in the UAE, so as to clarify any tax-related questions or doubts that they may have, and also provide the entrepreneurs with access to all information related to tax filing in the UAE, thus ensuring that all the businesses follow the regulations and laws related to business taxes in the country.
Corporate Taxation in the UAE will Begin June 2023 Onwards
According to the Federal Decree-Law No. 47 (2022), the United Arab Emirates started issuing Taxation of Corporations and Businesses, a.k.a. Corporate Tax.
The law, issued on December 9, 2022, states that eligible businesses and corporations operating in the United Arab Emirates will be charged with corporate tax starting from the financial year that starts on or onwards from June 1, 2023.
The aim behind introducing corporate tax is to ensure that the United Arab Emirates can achieve the strategic objectives set by the government of the country, as well as to ensure that the transformation and development of the country stay on an accelerated path.
The corporate taxation implemented within the United Arab Emirates follows the standards opted for by the governments internationally. Combined with the extensive network of double-tax treaties with the United Arab Emirates, the new taxation movie will ensure the country’s top position as the top-tier destination for investment and business on a global level.
Starting from June 2023 onwards, any businesses or other juridical individuals that are either incorporated within the UAE or effectively controlled and managed within the UAE will be subjected to corporate tax.
Other categories where corporate tax will be implemented include individuals that conduct a single business or multiple businesses within the UAE or other juridical non-resident, a.k.a foreign legal entities, if they happen to have a permanent type of establishment listed within the United Arab Emirates.
Exemptions from the corporate tax are also available for government entities and other entities that are controlled by the government. Moreover, businesses that function with extractive and non-extractive natural resources, provided that they are notified to the Ministry of Finance and meet certain requirements, are also exempted from corporate taxation.
Other categories of businesses that are exempt from corporate taxation include entities that work for the public benefit (if they are exempted by cabinet decision), and entities that function in the fields of public funds, private funds, social security funds, and certain qualifying investment funds.
The first workshop as part of the “Tax Support” initiative launched by the FTA happened on January 24, 2023, and January 25, 2023, as a joint event collaboratively conducted by the Federal Tax Authority and the On Time Business Solutions Centre, located in Oud Mehta in Dubai.
FTA stated that activities under the new initiative will continue to happen throughout the rest of the year 2023, and will eventually cover all seven emirates of the UAE.
The workshops and other events will be conducted in partnership with the relevant entities and centers, both government and private ones.
In the first two workshop sessions conducted at the On Time Business Solutions Centre in Oud Mehta, Dubai, the representatives from the FTA answered questions from business owners and helped them with the required support and knowledge to go through any challenges that they were facing as part of the processes related with the online registration, tax returns submission, tax due payment, and tax refunds.
By conducting these sessions in all emirates across the UAE, the FTA aims to keep increasing tax awareness and compliance and reduce the chances of any troubles for business owners, that may be committed due to the poor knowledge of tax-related procedures and other information surrounding it.
The FTA also promotes such activities through its social media channels, so as to make sure that all business owners are aware of such practices put in place by the FTA and other related entities to help business owners. Also, the strategic partners that FTA collaborates with within each emirate, will also assist in inviting representatives of businesses within the emirate to participate in the workshops and other events.
Apart from the workshops, entities responsible for the implementation of corporate taxation in the United Arab Emirates, including the Ministry of Finance and Federal Tax Authority have several other resources available as well, to help businesses and other individuals who may come under the corporate tax bracket.
The official Federal Decree-Law No. 47 of 2022 that details the Taxation of Businesses and Corporations can be found here. There is also a detailed FAQ section, which can be accessed here, that details almost all the questions and concerns anyone may have regarding corporate tax, also known as Business Profits Tax, in the UAE.